Reductions in Asking Prices Reach All-Time High

February 8th, 2012 16:56

Over a third (36.7%) of UK properties for sale currently have been reduced in price at least once since first coming onto the market, according to property search website Zoopla.co.uk.

The average discount off the original asking price being offered by sellers across the UK on these homes now stands at £19,580 (7.5%) while the average discount on price-reduced properties on offer today is over £1,000 more than this time last year when it stood at £18,475 (7%). 

Homeowners have slashed huge sums from their original asking prices in an attempt to attract buyers. The total amount reduced from the asking prices of all properties currently for sale across the country stands at £2.5 billion. 

Zoopla.co.uk, which lists hundreds of thousands of properties for sale, offers a unique facility on its website that lets users sort search results by those that have been most reduced in price, highlighting potential property bargains to home buyers across the UK. 

Glasgow tops the list of places where the biggest discounts are currently on offer with an average price reduction of 9.2% (£12,566) with sellers in Blackpool also making big concessions, knocking 9% off their original asking prices on average. Maidstone rounds out the top three areas with the highest average reductions in price at 8.5% (£19,668).

Stockport has the highest proportion of discounted properties for sale with nearly half (49%) of sellers having cut their asking prices at least once. Other areas where a big proportion of sellers have felt the need to drop prices include Chesterfield (45%) and Rotherham (44%).

Zoopla.co.uk spokesperson Nicholas Leeming said

“The current average discount of £19,580 is a new high indicating that sellers have come to terms with the market realities. Pricing correctly remains key when selling a home and whilst there is a shortage of sale stock currently, buyers are more discerning and more informed than ever before.”

“Serious sellers must do their homework and follow the advice of their agent before settling on an asking price – otherwise they may well find their property on the market for longer than they’d hoped.”

17% of Brits Putting Their Credit File at Risk

February 7th, 2012 12:37

New research by Moneysupermarket.com has revealed that almost 17% of Brits missed payments for at least one bill in 2011, potentially putting their credit profiles at risk.

Credit cards, unsurprisingly came out as the top missed payment.

The research shows that around three million people (7%) had missed a payment on a credit card bill in 2011, which is a frightening statistic when you consider the amount of credit cards and personal loans being applied for in 2012 is expected to rise.

Council tax was another of the most frequently missed payments with 1.9 million people missing a payment which works out at 4%, and increase on the 3% for 2010. Mobile phones, personal loans, broadband, Sky and gas and electricity bills were also high up on the list as payments most missed (3 per cent each).

Scotland and Wales had the greatest amount of consumer missing payments with 22% having missed payments in 2011 and the East Midlands was listed as the place most unlikely to miss a payment with 9 out of 10 people (88%) having mot missed a payment for any major bill in the last 12 months.

Head of Banking at Moneysupermarket.com, Kevin Mountford, said:

“Our research shows there’s still a worrying amount of Brits potentially damaging their credit rating by failing to pay their bills on time, with credit card bills being the most missed. A late or missed payment on a credit card bill not only impacts your credit profile, but will also lead to the loss of promotional rates on the card, which can be a costly mistake. ”

“For example, missing your first payment on a 12 month 0 per cent credit card deal would cost an additional £300 in interest over the 12 months if you moved on to an average credit card rate of 17.29 per cent. Therefore, prioritising your monthly obligations and setting up a direct debit for the most vital bills is a must for those who tend to forget to pay on their deadline.”

“Missing a payment could also have a knock-on effect for future applications such as credit cards and mortgages. Those applying for a credit card need to prove they can make regular and stable payments and any black marks against a credit profile would hinder chances of being approved.”

“For those who have missed payments affecting their credit file, MoneySupermarket has a SmartSearch credit profiling tool which matches applicants with the most suitable products based on their individual credit score, but does so without leaving a footprint on the applicant’s file.”

“It is important that people are clear on what could damage their credit profile to make sure they don’t get caught out simply by not knowing.  Repayments on credit cards and other financial transactions such as mortgages and use of overdraft facilities are all recorded on your credit file.”

“The majority of household bills and government related fines and payments aren’t recorded but contract mobile phone payments are, so it can be very easy to get caught out by not paying bills on certain products, especially if you are not aware of the consequences of your actions.”

“A period of price adjustment in the lettings market” say Townends

February 6th, 2012 14:58

Price hikes in the London rental market appear to have peaked and in some locations, are entering a period of adjustment with rents slightly reduced. 

According to Caroline Kavanagh, Managing Director of Townends Lettings and Management, in order to keep hold of the best tenants, landlords must realise that the market has stabilised and reassess their rents accordingly. The buy-to-let market has grown at a substantial rate over the last two years with rents hitting an all time high in many London boroughs, but the rate at which rents have risen is simply not sustainable for tenants.

Ms Kavanagh comments

“For a long time, landlords have been in the driving seat but the start of the new year seems to have brought about a change in tenant attitude, one that is no longer willing to just accept price rises, but that is prepared to look for an alternative in order to take back an element of control.”

Many tenants are spending two-thirds of their income on rent making saving of any kind nearly impossible. Applicant numbers are equal or marginally above the same period last year demonstrating that demand remains high, so a period of price adjustment does not suggest that the buy-to-let bubble has burst, but simply reflects a more stable market.

“What landlords must realise is their income is still well above what was being achieved two years ago and savvy landlords will take this on board and adjust their expectations and prices accordingly to maintain their competitive edge.  Similarly, landlords should also review the facilities they are providing to ensure it warrants the asking price, thus attracting the best calibre of tenant and avoiding voids.  Optimising rents at varying points in the market by not „forgetting‟ about what makes a property so attractive is essential. “

House Prices Increased in January Say Halifax

February 6th, 2012 14:50

House price growth remains weak on an underlying basis, despite prices rising by 0.6% in January, according to the latest Halifax House Price Index.

The three month leading to January saw house prices 0.9% lower than they were  in the proceeding three months and this measure of the underlying trend has now been negative for four consecutive months.

House prices in January rose 0.6%, on a monthly basis, which was first icnrease since October and only the second in the past six months.

Prices in the three months to January were 1.8% lower than in the same period a year earlier. This measure of the annual rate has edged lower in the last two months from -1.0% in November, but is still comfortably above the recent low point of -4.2% in May 2011.

Overall, house prices have changed little in the past eight months. The UK average price in January, at £160,907, was very similar to that in May 2011 (£161,039).

Lending and Savings Up at Mutuals in 2011

February 1st, 2012 14:51

Gross lending by building societies and other mutuals in 2011 was £23.6 billion which is up 16% compared to 2010 (£20.4 billion), bucking the trend across much of the rest of the market. Gross lending by mutuals in December was £2.1 billion, up 15% compared to December 2010 (£1.8 billion), report the Building Societies Association.
 
Savings balances at mutuals increased by £4.0 billion in 2011 compared to an increase of £0.2 billion in 2010. Balances held with mutuals increased by £0.3 billion in December, compared to an increase of £1.5 billion in December 2010.
 
Lending:

  • 16% increase in gross mortgage lending in 2011 at £23.6 billion (£20.4 billion in 2010).
  • 15% rise in gross mortgage lending in December, up to £2.1 billion from £1.8 billion in December 2010.
  • 19% rise in mortgage approvals in 2011 at £23.1 billion (£19.4 billion, 2010).
  • £1.8 billion of mortgages were approved in December, up 49% on December 2010 (£1.2 billion).

Savings:

  • In 2011, savings balances held with mutuals have increased by £4.0 billion, compared to an increase in balances of £0.2 billion in 2010.
  • Savings balances increased by £0.3 billion in December 2011, compared to an increase of £1.5 billion in December 2010.
  • Excluding interest credited to accounts, mutual deposit takers had a net withdrawal of £0.1 billion in 2011, compared to a net withdrawal of £3.7 billion in 2010.
  • In December 2011, mutual deposit takers had a net withdrawal of £0.1 billion, compared to a net receipt of £1.1 billion in December 2010. 

Commenting, Adrian Coles, Director-General of the Building Societies Association, said:

“Activity in the housing market has been weak throughout 2011 with the number of transactions close to an all time low. New lending by mutuals, however, rose 16% in 2011 compared to 2010, whilst the UK’s major banks recorded a small reduction in lending over the same period. The housing market faces significant headwinds over the coming 12 months but mutuals are poised to take on these challenges and continue to offer market leading rates and innovative products to home movers and first-time buyers alike.”
 
“Growth in savings balances at mutuals increased significantly in 2011 compared to previous years although it is clear that savers are still struggling to save as much as they would like, or are choosing to use spare cash to pay down debt instead. The fall in the rate of inflation may offer some breathing space to households but if conditions in the labour market continue to deteriorate and wage growth remains low, household finances are likely to remain squeezed for some time to come.”

Increase Seen in Buy To Let Market

February 1st, 2012 14:46

New research released by Moneyfacts has shown a a rise in availability of buy-to-let mortgages in recent months.

Moneyfacts reports a total of 486 buy-to-let mortgage deals available which is an increase in the that were available 386 last February.

Buy-to-let product availability

  • February 2012 – 486
  • February 2011 – 386
  • February 2010 - 243

A knock on effect of the increase of buy-to-let deals currently available is the average interest rate has decreased.

Buy-to-let average rate

  • February 2012 – 4.79%
  • February 2011 – 5.00%
  • February 2010 – 5.31%

Moneyfacts spokesperson, Louise Holmes,  said:

“During the peak of the credit crisis the number of buy-to-let deals shrank considerably as lenders saw it as a high risk area of the market.”

“Many aspiring homeowners have had their property dreams dashed due to strict lending criteria and large deposits, meaning the only option left is to rent. This increase in demand for rental properties has resulted in a degree of competition returning to the buy-to-let sector, giving it a well-needed boost.”

“These latest figures, particularly a reduction in the average rate, should make pleasing and encouraging reading for landlords and property investors.”

Active Landlords to Be More Cautious in 2012

January 31st, 2012 11:26

In the latest survey of landlords by the Association of Residential Letting Agents, figures reveal that the increase in buying and selling activity in the Private Rented Sector in 2011 but indicates this may not continue in 2012.

The figures show that the number of landlords that sold a property in the last 12 months increased from 6% to 8% in Q4 2011 with the number of landlords who said that they had purchased properties also increased from 23% to 25% over the same period. 

The figures would indicate that landlords were particularly focused on reshaping their property portfolio throughout 2011 with landlords in the North West of England being amongst the most active as 31% of respondents purchased at least one property during the year, and 11% sold at least one.

In contrast the number saying they expect to acquire further properties in the next 12 months dropped slightly, from 27% to 25%, while the number saying they expect to sell rose from 8% to 9%.

Landlords have been steadily decreasing the percentage they are borrowing on each property. This could reflect the continuing lack of mortgage finance or be a reflection of the drop in property prices in some parts of the country. 

The current average loan-to-value of 46% represents the lowest seen since Q2 2007, when landlords reported an average of 60%.

Tim Hyatt, President of ARLA said:

“PRS forecasts have stated that the rental sector will still offer growth in the coming year  – probably of four to five per cent according to Liam Bailey of Knight Frank.”

“Rental growth will remain robust across all sectors, albeit at a more sustainable level of around 4% to 5% for this year.”

“This will come about in part because of the continued inactivity in the sales market but nothing like the growth we have seen for the past two years. But the PRS still represents substantial value for investors looking to enter the market or increase their participation.”

Ian Potter, ARLA Operations Manager, said: 

“These statistics indicate that landlords changed their property portfolios throughout last year, in some cases expanding portfolios despite gloomy economic climate.”

“However, our research also suggests that into 2012 this situation might change, which could be a sign for concern. A healthy PRS is crucial in providing choice and flexibility for consumers across the housing market in 2012 and, ultimately, helping to provide more homes for more people.”

“We would urge anyone planning to let out additional properties, or a property for the first time, to do plenty of research and consult with experts – it is vital to ensure your investment is properly protected.”

“Using a regulated ARLA agent will mean you have access to Client Money Protection and a redress scheme, as well as advice on selecting the right property at the right price.”

First Time Buyers Struggling to Get on Property Ladder

January 31st, 2012 11:09

First time buyers are finding it harder to get on the property ladder now than during the 2009 recession, new research has revealed.

The Ability to Buy Index from the Royal Bank of Scotland (RBS) has revealed the difficulties that first time buyers are currently experiencing, despite the fact that average monthly mortgage payments are currently lower than they were in 2003.

While the monthly mortgage costs are lower it is the rising cost of living that first time buyers are having difficulties with particularly when trying to save enough for a deposit.

The Index revealed that first time buyer house prices were 18% below their peak in 2007, and gross earnings have risen by 10%.

This should be seen as good news for first time buyers and increase their chances of getting on the property ladder but the rising costs of food, utilities and transport has negated the positives of the lower house prices and increased earnings.

Fionnuala Earley, RBS Group UK Consumer Economist, said:

“Our new index provides the most accurate picture available today of the squeeze on first-time buyers, by including the effects of tax, National Insurance, earnings and rising living costs, in addition to house prices and interest rates.”

“Our first results show that higher living costs are making it more challenging for first-time buyers to enter the market, despite the lowest mortgage payments in almost a decade.”

“But the news is not all bad – inflation is now beginning to fall and assuming earnings still rise and interest rates remain low, this should help to improve the ability for first time buyers to enter the market.”

1 in 5 Landlords Bought Additional Rental Property in 2011

January 26th, 2012 10:37

The latest Young Index report of Private Rented Sector sentiment shows that 19.1% of landlords added additional residential property assets to their portfolios during 2011.

The activity was driven by strong positive expectations for both capital growth and income returns for the year ahead.

London clearly leads the way with 85.1% of respondents expecting rents in the capital to continue to rise throughout 2012 and a full 100% of landlords predict that property values in London will be at current levels or higher by the end of the year.

Interest rates are widely expected to remain low. 58.3% of landlords expect the Bank of England base rate to remain static throughout 2012. 

Of those who do see a rise on the horizon, their average prediction for Q4 2012 is less than half a percentage point higher than the current all time low of 0.5%, at 0.78%.

Undoubtedly, current low costs of finance represent a short term fillip but landlords clearly see the Private Rented Sector as a long term investment class.

Prime Property Price Rally Falters

January 26th, 2012 10:28

The asking price for primpe properties has dropped for the first time in nine months according to information released in the latest prime index report from Primelocation.com

The drop sees the average price for a prime UK property (the top quarter of property in the UK market by value) drop by 0.5% to £473,373.

Asking prices are still 4% higher than they were in december of 2010 after the longest sustained rally since the index began. The past year has seen an average increase of £18,059 to property, an increase of £49 per day.

London and Wales were the only regions which saw an icnrease in prim property value in December with eight regions seeing decreases. The West Midlands saw the largest decrease with values dropping by 1%.

Unusually, prime properties underperformed slightly against the general market in December. The average price for all UK properties fell by 0.4%, slightly less than in the general market. However, all bar one of the UK regions saw a decline in prices in the broader market.

Prime property prices continue to outperform the general market in the long term. Over the past year, the average UK property has seen its price rise by 0.8%, while the average price of a prime property has increased by 4%.

Trends in the prime platinum market broadly mirrored those in the prime market in December. Asking prices for prime platinum properties were 0.5% lower than in November, though 3.8% higher than December 2010.

Prime platinum prices fell in eight regions, increasing in London, Wales and the North West.

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